The Reserve Bank of India (RBI) on February 24, 2025, notified regarding the Review and rationalization of prudential norms – UCBs.
The following has been stated namely: -
• It has revised certain norms for Urban Co-operative Banks (UCBs) to enhance operational flexibility while maintaining regulatory objectives.
• The key changes include increasing the classification limit for small-value loans to ₹2.5 million or 0.4% of Tier I capital (whichever is higher), with a borrower cap of ₹30 million.
• The aggregate exposure limit for residential mortgages has been raised to 25% of total loans and advances, while non-housing real estate exposure is capped at 5%.
• Individual housing loan limits have been adjusted, ranging from ₹6 million to ₹30 million.
• Additionally, the provisioning timeline for investments in security receipts has been extended by two years, now set for completion by the 2027-28 financial year.
[Notification no. - RBI/2024-25/118]
